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IBOR Transformation Australian Working Group


Around the world, national working groups have been established to lead work on identifying alternative nearly risk-free reference rates (RFRs) which can be used as an alternative to LIBOR and to set the strategic direction on the transition to RFRs. Principal among these national working groups are the Working Group on Sterling Risk-Free Reference Rates and the Alternative Reference Rates Committee (ARRC).

The IBOR Transformation Australian Working Group is the national working group for considering the strategic issues facing Australia as the market is transformed by international developments with regard to IBOR transition, and leading work on domestic responses to the change. The ITAWG was established by industry after consultation with the Reserve Bank of Australia and liaises regularly with the RBA on its work.

Pieter Bierkens       Chair      
David Ziegler          Member              
Duncan Marshall    Member              
John Henson          Member              
Mark Beeley           Member


Market Statement of 4 April 2022 on the Use of Interest Rate Benchmarks in Australia

The IBOR Transformation Australian Working Group (ITAWG) has issued a Market Statement dated 4 April 2022 on the use of Interest Rate Benchmarks in Australia. ITAWG is pointing out that Australia is taking a multi-rate approach whereby market participants should choose the reference rate that best suits the particular product and situation. Therefore, the market is likely to see a shift towards referencing AONIA across certain products. Accordingly, market participants may need to make suitable preparations in order to accommodate AONIA's increasing use.

Market Statement of 25 November 2021 on Switch to Referencing SOFR

On 25 November the IBOR Transformation Australian Working Group (ITAWG) issued a Market Statement, following discussions with market participants and a meeting with the Australian financial market Regulators, in which it noted that United States financial markets authorities have provided clear supervisory guidance, endorsed by regulators in many other jurisdictions including Australia, that banks should cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by 31 December 2021.


In December 2019, the IBOR Transformation Australian Working Group wrote to the Council of Financial Regulators requesting guidance on the supervisory expectation regarding conduct matters associated with the transition from LIBOR to alternative reference rates (ARRs) in the form of near Risk Free Rates (RFRs). The Australian Group is the national working group that considers the strategic issues facing Australia as the market is transformed by IBOR transition. Two issues were raised. The first matter concerned conduct risk in relation to the transition to RFRs; the second concerned client communications. This letter is available here.

After deliberation by the Council, ASIC responded to the request for guidance and its views are set out in a letter of reply to Australian group. The letter addresses conduct risk in relation to the transition to RFRs and client communications. ASIC’s guidance letter is available here.

On 9 October 2020, ISDA announced the upcoming launch of its IBOR (interbank offered rates) Fallbacks Protocol (the Protocol) and IBOR Fallbacks Supplement (the Supplement), which focus on strengthening existing and new derivatives contracts with robust fallback language. After it is launched on 23 October 2020, the Protocol will take effect on 25 January 2021. Timely adoption well before this time will promote market certainty.

With the support of the Australian Prudential Regulation Authority (APRA) and the RBA, ASIC released a statement on 13 October 2020 urging Australian institutions to adhere to the ISDA Protocol and Supplement.

On 23 October 2020, the IBOR Transformation Australian Working Group released a statement to welcome the launch of the new ISDA Protocol and Supplement, noting that the launch of the fallbacks for derivative contracts is an important impetus for the ongoing work developing standardised fallback language for other categories of financial products.

Minutes for Working Group meetings are available below.

Working Group Minutes


AONIA Market shift - Discussion with AFMA MGC Reps, RBA OMO 22 Feb Announcement - Implications for 1 month Rate and an Update on the BBSW fallback language development


An update on the discussions with the Canadian WG and SOFR First in Australian market, Update on the BBSW fallback language development, What, if anything, does synthetic LIBOR imply for Australia and Market development direction - Possibility of Term AONIA


Australian Market response to simultaneous switch on 21 September - Cross Currency Swaps, BBSY Fallback to AONIA under ISDA Mas - operational considerations for implementation, Fallback language and a RBA Repo eligibility announcement


4 June ASIC statement on transition, 7 July ARRC Meeting, Taxation, An update on the development of FRN fallbacks and determining the Working Group Chairperson


ISDA fall-backs, Overseas milestones of LIBOR transition, USD Transition Timeline and BBSW fall-backs


Developments since last meeting, industry needs, Agenda items for meeting discussion with Regulators and US and UK Safe harbour Legislation


Summary of Recommendations: APLMA, AFMA and the FTA for risk free rate loan market, Priorities for 2021, DCM Issues, Margining - LIBOR Transition discrepancies in timeliness of reconciliations - CPS 226, NZFMA Market consultation, RBA Consultation on Repo eligibility and Timing for meeting with Regulators


Fallback for Cash products and Matters for noting


Follow-up from discussion with RBA on Monday on Fallback consultation, Preparatory discussion to ASIC call, ASIC discussion re Best Practice Recommendations and AFMA Working Group and RFRs in Australia


Feedback on interpretation of ISDA fallbacks and support for ARRC initiative for NY law reform.



Discussion with official guests from RBA and ASIC about upcoming ISDA fallback definitions and protocol, fallback to AONIA, ASIC letter to industry and ARRC representations with regard to a legislative safe harbour. 



Statutory protections, organisation of a meeting of industry associations, preparation of market discussion paper on implications of ISDA credit spread adjustment for the Australian market, developing market practices.



ASIC letter in response to group letter on conduct risk, COVID-19 and implementation of LIBOR reform, credit spread adjustments for cash products, developing market practices. 



Discussion with James Leather, representative of the Association of Corporate Treasurers on the UK Working Group on Sterling Risk-Free Reference Rates subgroup, letter to CFR relating to conduct risk, delay in ISDA fallbacks, FSB OSSG meeting. 



Discussion with Harri Vikstedt about the Canadian approach to benchmark reform and the Canadian Alternative Reference Rate Working Group (CARR), letter to CFR relating to conduct risk, IBOR Market Responses Working Group. 



Areas where market may benefit from enhanced regulatory guidance, ISDA conference. 



Discussion with ASIC, ASF consultation, ISDA consultation, BBSW fallbacks. 



OSSG Working Group, ISDA pre-cessation trigger consultation, BBSW fallback progress, standard disclosure, communication, ASF IBOR Working Group, ARRC report on considerations for use of RFRs in interdealer cross-currency swaps. 



Conversation with RBA, OSSG regulatory, accounting and tax discussions, market communications, accounting developments. 



Industry developments regarding SONIA, RBA related discussion. 



Selection of the cash rate in Australia as the ARR versus developing an overnight secured repo rate, ARRC follow-ups for the cross currency working group, engagement with other associations. 



Issue identification and priority setting, industry coordination, Australian trigger events, use of AONIA as a reference rate.